Written by
The employee experience platform
Great employees are a significant resource, and hiring the right people can give your company a competitive advantage.
The competition to attract the best people is fierce, and the hiring process is only the first step. Keeping talented employees at your company is just as essential, because the cost of replacing them when they leave is often high. Our people scientists have found that the cost can range from 30% to 200% of a person’s salary. For these reasons and more, employee turnover can present a serious obstacle to an organization’s success.
Thankfully, there are actions you can take that have been proven to improve employee retention, such as implementing engagement surveys – and taking action based on the employee feedback you gather. In fact, research shows that instilling a company culture of engagement in your workplace can help keep people on board and committed to your company. In this article, we’ll explain why your employee engagement strategy matters and share tips for making it more effective.
The hidden cost of low engagement: Why retention starts with culture
When a valued person leaves your organization, the departure can come with various costs. Among others, their decision to leave can lead to a loss in productivity and resources and negatively impact employee morale.
Losing employees is bad for business. And organizations with low employee engagement are likely to suffer the most.
A Gallup study of 183,806 business and work units found that businesses with engagement scores in the bottom quartile experienced an average of 21% - 51% more employee turnover than those in the top quartile.
The data behind engagement-driven retention
Research shows that companies that seek regular employee feedback have turnover rates that are 14.9% lower than those that don’t.
The simplest and most accurate way to understand and measure workplace engagement is by using an employee engagement survey.
Engagement surveys are a source of valuable insights, especially if they’re designed with people science methodologies in mind. For example, asking the right questions can tell you what’s driving employee retention up or down at your organization and inform your retention strategies. Choose survey questions intentionally for an accurate view of engagement in your company.
By using survey results to connect employee sentiment with key metrics such as turnover risk, HR teams can uncover previously hidden patterns. For example, negative sentiment or declining engagement in high-performing teams may signal potential burnout, which can be a precursor to employee resignations.
Improving employee engagement is an ongoing, fluid process for many organizations. While there’s no quick way to boost engagement, long-term employee engagement strategies can strengthen your company culture over time. The steps you take to improve engagement today may not change anything right away, but they’re a great starting point to seeing better employee retention rates in the future.
How a strong company culture drives retention and engagement
According to the Chartered Institute of Personnel and Development (CIPD), engaged employees are "less likely to leave the organization" they work for. This reality is plain, simple, and backed by hard data. As early as 2004, quantitative analysis by Corporate Leadership Council found that engaged employees are "87 percent less likely to leave the organization."
An internal study by financial services giant Standard Chartered found similar results. Among their branches, those with high employee engagement had 46% less voluntary turnover.
Of course, some sectors may experience naturally higher turnover rates than others. If your industry has historically high turnover rates, you might believe that boosting employee engagement won’t have much impact. However, the evidence shows that improving engagement makes a real difference.
While the precise impact of engagement on turnover rates will vary depending on the inherent characteristics of your company and industry, the results are virtually always positive.
In 2013, the Harvard Business Review reported that historically high-turnover organizations benefitted from 25% lower turnover thanks to employee engagement efforts. Low-turnover organizations experienced even greater benefits, with 65% lower turnover.
If employee engagement isn’t on your C-suite’s radar, it should be. Turnover is costly. A culture of engagement not only helps attract great people but also helps you keep your best employees with you.
Proven strategies to boost employee retention today
While some tips and tricks may help fix minor or temporary issues, employee retention is best viewed through a strategic lens. This includes thinking holistically about how employee engagement can play a role in identifying and influencing the factors that drive both employee turnover and retention.
Remember: It’s the organizations that are serious about instilling an authentic company culture of engagement that see the biggest retention benefits.
Here are a few considerations as you think through your employee retention strategies:
Implement an employee feedback loop
In addition to conducting engagement surveys, we also suggest implementing an employee feedback loop model to ensure that the changes you make lead to long-term, continuous improvements:
- Collect: Design a survey that asks the right questions, and use it to collect employee feedback.
- Understand: Analyze results from your survey and pinpoint your top drivers of employee engagement (and therefore, retention).
- Act: Share the data, build an action plan, and implement changes. Clearly communicate the changes you’re making to your employees. This step is critical, as employees need to know that their feedback leads to actual changes. As our CEO Didier Elzinga wrote, “Your people don’t get survey fatigue. They get lack-of-action fatigue.”
Build a strong professional development program
Culture Amp data shows that employees who lack access to meaningful L&D opportunities are two times more likely to leave an organization within a year. This is why it’s so important for companies to take a thoughtful approach to employee development.
In order for employees to feel more engaged and motivated to stay at a company, they need to understand what's possible for them to achieve – and exactly what experience, skills, and competencies it will take for them to reach the next level of their careers.
Create continuous learning opportunities for employees. Whenever possible, embed development into their daily work rather than organizing one-time events. Encourage leaders to model a growth mindset, provide diverse learning opportunities and employee training, recognize learning efforts, and offer company-wide development programs and processes. This continuous approach can help your business build a company culture where employees thrive long-term.
Use employee onboarding to set the stage for retention
The impact of onboarding is felt in terms of years, not weeks. Everyone – from the individual to their team to the entire company – benefits from a comprehensive onboarding program because it means people become productive sooner and stay longer.
To maximize the first 90 days of an employee’s time at your organization, start by setting clear expectations about what they need to learn immediately versus over time as they settle into their roles. Prioritize what they need to know and do first, and let them know what can wait.
Look for opportunities to personalize the onboarding experience around different employee needs. People learn in different ways, so offering a mix of self-paced resources, interactive sessions, peer learning, and hands-on experiences allows for greater engagement and knowledge retention.
A flexible onboarding program that gives new employees time to learn and process all the information puts them in a position to succeed in their roles, which can lead to higher engagement and motivation to remain in the company.
Leverage data to track and improve retention
Companies often struggle to retain their top talent because they overlook early signs of employee disengagement. Without the right tools, it’s hard to recognize when employees are unhappy and at risk of leaving the company. Reducing high turnover requires an awareness of which groups are most at risk and how critical they are to your company.
For example, suppose your employee engagement surveys show that employees are less satisfied with their career development opportunities (reflected in lower survey scores). People analytics can analyze this employee sentiment in the context of other trends, such as a rise in absenteeism within the same group. This helps HR teams identify patterns and enables quick and informed action.
Using these insights, your organization can implement targeted interventions, such as enhancing career development opportunities or addressing specific areas of concern, before disengagement leads to resignations. This proactive approach not only supports retaining top talent but also significantly reduces the financial and operational costs associated with turnover.
Take action: Build a workplace where employees want to stay
An effective employee engagement strategy is key to driving up employee retention, but keep in mind that no two organizations are exactly alike. As you explore how to reduce employee turnover, your organization may discover unique drivers of both engagement and retention.
You’ll have your own engagement initiatives and your own retention strategies. The employee experience is not consistent from one organization to the next, so it’s helpful to think about these differences at the group level.
That’s where Culture Amp comes in. By automatically connecting your HRIS and survey data, this powerful retention and analytics solution will detect the earliest turnover warning signals across all groups. Culture Amp empowers you and other leaders across your business with a comprehensive, people-science-informed framework for accurately predicting and preventing future turnover – all through one easy-to-use dashboard that surfaces comprehensive answers to your previously unanswerable retention and turnover questions.
